COMPANY NEWS

COMPANY NEWS; Nestle to Sell Its Stouffer Hotel Unit

By EDWIN McDOWELL

Published: April 1, 1993

Nestle S.A., the giant Swiss food manufacturer, said yesterday that it had agreed to sell its Stouffer Hotel Holdings Inc. for an undisclosed amount to a private Hong Kong company.

Stouffer, with headquarters in Solon, Ohio, owns or operates 39 hotels and resorts in North America and one in St. Thomas, in the United States Virgin Islands. Most of the properties are upscale and several, including resorts in California, Hawaii and Mexico, are in the luxury category.

Nestle, which had 1992 sales of $36.5 billion, acquired Stouffer Hotels in 1973 as part of the acquisition of the Stouffer Corporation, a maker of frozen foods. It said yesterday that selling the hotels was part of its strategy to focus on its food business.

Toward that end, Nestle had withdrawn from a hotel joint venture with Swissair in 1989, explaining that it did not fit into its future business plans. Earlier this month, Nestle purchased Perrier for $2.8 billion, and last week it increased its stake in Italy's San Pellegrino mineral water company from 20 to 25 percent.

Michael J. Branca, the food and beverage analyst for NatWest Securities, said that by agreeing last week to publish operating profits by major product divisions and by geographical region, Nestle was positioning itself for its shares to be listed on the New York Stock Exchange.

"Publication of its results in that format," Mr. Branca said, "clears one of the last hurdles that had been holding back an N.Y.S.E. listing."

Stouffer is considered an industry anomaly. Although it has grown from five hotels in 1981, it has focused on the high-end market, eschewing the industry's trend of adding properties in several price niches. Scattering of Its Properties

Instead, Stouffer has segmented by location, scattering its properties in downtowns in suburbs like White Plains, at airports in gateway cities like Atlanta and in resorts. It has six Presidente hotels in Mexico, including ones in the resorts of Cancun and Cozumel.

Stouffer also bucked the industry trend by growing largely through outright ownership or joint ventures, rather than by franchising properties and managing them. Two-thirds of the 15,000 rooms marketed under the Stouffer and Presidente names are wholly or partly owned by the company.

But hotels in most price levels have been hard hit by the recession. And although Stouffer has hotels in 19 states, it does not have any in New York City or Boston, cities that are especially important to hotel companies that cater primarily to business travelers.